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"Nobody thinks they'll have an emergency until it happens," said Chris Long, a certified
financial planner at Long & Associates in Chicago. "There are certain unforeseen expenses that
happen with everyone."

A study released last month by Bankrate.com found that only 24percent of Americans have saved
six months' worth of living expenses, and 24 percent have no emergency savings at all.

So, how do you build an emergency fund when you're supposed to be socking away for retirement,
paying down debt and trying to save for your child's college education while also putting food on
the table and making sure the lights are kept on? Answers to questions about creating and
maintaining your cash stash:

How much do I need? There are two basic levels of emergency funds:

Many financial experts say you need an emergency fund to pay for unexpected costs, such as a car
repair, dental treatment or airline ticket to see a gravely ill relative. With cash on hand, those
expenses won't end up on a credit card, potentially racking up interest and making the expense far
more costly. A relatively small cash hoard of $500 to $1,000 typically is sufficient to pay for
unexpected expenses. At the very least, it limits the amount a consumer has to borrow.

And it's doable for a lot of people, said Liz Weston, author of
The 10 Commandments of Money: Survive and Thrive in the New Economy.

"That's a very reasonable goal; $500 is a number most people can get their minds around," Weston
said. "That will cover a lot of the little setbacks like a small car repair or emergency plane
ticket. It puts you ahead of the paycheck-to-paycheck rat race."

A whole different level of emergency stash is a lost-job fund. This allows a household to stay
financially afloat for several months after a breadwinner loses a job.

Conventional advice says a full emergency fund should equal three to six months of living
expenses. Practically, that can be three to six months of bare-bones expenses, because a household
in crisis presumably would cut back on all expenses but necessities. That dollar figure can equal
three to six months of covering the rent or mortgage, feeding the family and paying for electricity
and gasoline.

What constitutes an emergency fund? Cash is certainly the central component of an emergency
fund, and some experts say that it's the only one. Others have a broader view, counting credit as
part of the emergency fund. Examples are unused credit on credit cards, home-equity lines of credit
and even loans from family members.

"While saving up that money is important, the thing that saves us a lot of times is access to
credit," Weston said.

Even so, aiming to have a significant cash stash is important.

"I still would eventually want that cash," Weston said. "I wouldn't say, 'I have a (line of
credit); I don't need to save anything.'"